(1) "Payment order" means an instruction of a sender to a receiving bank, transmitted orally, electronically, or in writing, to pay, or to cause another bank to pay, a fixed
or determinable amount of money to a beneficiary if: (i) The instruction does not state
a condition to payment to the beneficiary other than time of payment, (ii) the receiving
bank is to be reimbursed by debiting an account of, or otherwise receiving payment
from, the sender, and (iii) the instruction is transmitted by the sender directly to the
receiving bank or to an agent, funds-transfer system, or communication system for transmittal to the receiving bank.

(2) "Beneficiary" means the person to be paid by the beneficiary's bank.

(3) "Beneficiary's bank" means the bank identified in a payment order in which an
account of the beneficiary is to be credited pursuant to the order or which otherwise is
to make payment to the beneficiary if the order does not provide for payment to an
account.

(4) "Receiving bank" means the bank to which the sender's instruction is addressed.

(5) "Sender" means the person giving the instruction to the receiving bank.

(b) If an instruction complying with subsection (a)(1) is to make more than one
payment to a beneficiary, the instruction is a separate payment order with respect to
each payment.

(a) "Funds transfer" means the series of transactions, beginning with the originator's
payment order, made for the purpose of making payment to the beneficiary of the order.
The term includes any payment order issued by the originator's bank or an intermediary
bank intended to carry out the originator's payment order. A funds transfer is completed
by acceptance by the beneficiary's bank of a payment order for the benefit of the beneficiary of the originator's payment order.

(b) "Intermediary bank" means a receiving bank other than the originator's bank
or the beneficiary's bank.

(c) "Originator" means the sender of the first payment order in a funds transfer.

(d) "Originator's bank" means (i) the receiving bank to which the payment order
of the originator is issued if the originator is not a bank, or (ii) the originator if the
originator is a bank.

(1) "Authorized account" means a deposit account of a customer in a bank designated by the customer as a source of payment of payment orders issued by the customer
to the bank. If a customer does not so designate an account, any account of the customer
is an authorized account if payment of a payment order from that account is not inconsistent with a restriction on the use of that account.

(2) "Bank" means a person engaged in the business of banking and includes a savings bank, savings and loan association, credit union, and trust company. A branch or
separate office of a bank is a separate bank for purposes of this article.

(3) "Customer" means a person, including a bank, having an account with a bank
or from whom a bank has agreed to receive payment orders.

(4) "Funds-transfer business day" of a receiving bank means the part of a day during
which the receiving bank is open for the receipt, processing, and transmittal of payment
orders and cancellations and amendments of payment orders.

(5) "Funds-transfer system" means a wire-transfer network, automated clearing
house, or other communication system of a clearing house or other association of banks
through which a payment order by a bank may be transmitted to the bank to which the
order is addressed.

(6) "Prove" with respect to a fact means to meet the burden of establishing the fact.

(b) Other definitions applying to this article and the section in which they appear are:

Sec. 42a-4A-106. Time payment order is received. (a) The time of receipt of a
payment order or communication cancelling or amending a payment order is determined
by the rules applicable to receipt of a notice stated in section 42a-1-202. A receiving
bank may fix a cutoff time or times on a funds-transfer business day for the receipt and
processing of payment orders and communications cancelling or amending payment
orders. Different cutoff times may apply to payment orders, cancellations, or amendments, or to different categories of payment orders, cancellations, or amendments. A
cutoff time may apply to senders generally or different cutoff times may apply to different senders or categories of payment orders. If a payment order or communication cancelling or amending a payment order is received after the close of a funds-transfer business day or after the appropriate cutoff time on a funds-transfer business day, the
receiving bank may treat the payment order or communication as received at the opening
of the next funds-transfer business day.

(b) If this article refers to an execution date or payment date or states a day on which
a receiving bank is required to take action, and the date or day does not fall on a funds-transfer business day, the next day that is a funds-transfer business day is treated as the
date or day stated, unless the contrary is stated in this article.

(P.A. 90-202, S. 1(4A-106), 3; P.A. 05-109, S. 32.)

History: P.A. 05-109 amended Subsec. (a) by replacing reference to Sec. 42a-1-201(27) with reference to Sec. 42a-1-202 to conform to revisions made to article 1 by the same act.

PART 2
ISSUE AND ACCEPTANCE OF PAYMENT ORDER

Sec. 42a-4A-201. Security procedure. "Security procedure" means a procedure
established by agreement of a customer and a receiving bank for the purpose of (i)
verifying that a payment order or communication amending or cancelling a payment
order is that of the customer, or (ii) detecting error in the transmission or the content
of the payment order or communication. A security procedure may require the use of
algorithms or other codes, identifying words or numbers, encryption, callback procedures, or similar security devices. Comparison of a signature on a payment order or
communication with an authorized specimen signature of the customer is not by itself
a security procedure.

(b) If a bank and its customer have agreed that the authenticity of payment orders
issued to the bank in the name of the customer as sender will be verified pursuant to a
security procedure, a payment order received by the receiving bank is effective as the
order of the customer, whether or not authorized, if (i) the security procedure is a commercially reasonable method of providing security against unauthorized payment orders, and (ii) the bank proves that it accepted the payment order in good faith and in
compliance with the security procedure and any written agreement or instruction of the
customer restricting acceptance of payment orders issued in the name of the customer.
The bank is not required to follow an instruction that violates a written agreement with
the customer or notice of which is not received at a time and in a manner affording the
bank a reasonable opportunity to act on it before the payment order is accepted.

(c) Commercial reasonableness of a security procedure is a question of law to be
determined by considering the wishes of the customer expressed to the bank, the circumstances of the customer known to the bank, including the size, type, and frequency
of payment orders normally issued by the customer to the bank, alternative security
procedures offered to the customer, and security procedures in general use by customers
and receiving banks similarly situated. A security procedure is deemed to be commercially reasonable if (i) the security procedure was chosen by the customer after the
bank offered, and the customer refused, a security procedure that was commercially
reasonable for that customer, and (ii) the customer expressly agreed in writing to be
bound by any payment order, whether or not authorized, issued in its name and accepted
by the bank in compliance with the security procedure chosen by the customer.

(d) The term "sender" in this article includes the customer in whose name a payment
order is issued if the order is the authorized order of the customer under subsection (a),
or it is effective as the order of the customer under subsection (b).

(e) This section applies to amendments and cancellations of payment orders to the
same extent it applies to payment orders.

(f) Except as provided in this section and in subdivision (1) of subsection (a) of
section 42a-4A-203, rights and obligations arising under this section or section 42a-4A-203 may not be varied by agreement.

(1) By express written agreement, the receiving bank may limit the extent to which
it is entitled to enforce or retain payment of the payment order.

(2) The receiving bank is not entitled to enforce or retain payment of the payment
order if the customer proves that the order was not caused, directly or indirectly, by a
person (i) entrusted at any time with duties to act for the customer with respect to payment
orders or the security procedure, or (ii) who obtained access to transmitting facilities of
the customer or who obtained, from a source controlled by the customer and without
authority of the receiving bank, information facilitating breach of the security procedure,
regardless of how the information was obtained or whether the customer was at fault.
Information includes any access device, computer software, or the like.

(b) This section applies to amendments of payment orders to the same extent it
applies to payment orders.

Sec. 42a-4A-204. Refund of payment and duty of customer to report with respect to unauthorized payment order. (a) If a receiving bank accepts a payment order
issued in the name of its customer as sender which is (i) not authorized and not effective
as the order of the customer under section 42a-4A-202, or (ii) not enforceable, in whole
or in part, against the customer under section 42a-4A-203, the bank shall refund any
payment of the payment order received from the customer to the extent the bank is not
entitled to enforce payment and shall pay interest on the refundable amount calculated
from the date the bank received payment to the date of the refund. However, the customer
is not entitled to interest from the bank on the amount to be refunded if the customer
fails to exercise ordinary care to determine that the order was not authorized by the
customer and to notify the bank of the relevant facts within a reasonable time not exceeding ninety days after the date the customer received notification from the bank that
the order was accepted or that the customer's account was debited with respect to the
order. The bank is not entitled to any recovery from the customer on account of a failure
by the customer to give notification as stated in this section.

(b) Reasonable time under subsection (a) of this section may be fixed by agreement
as stated in subsection (b) of section 42a-1-302, but the obligation of a receiving bank
to refund payment as stated in subsection (a) of this section may not otherwise be varied
by agreement.

History: P.A. 03-278 made technical changes in Subsec. (b), effective July 9, 2003; P.A. 05-109 amended Subsec. (b)
by replacing reference to Sec. 42a-1-204(1) with reference to Sec. 42a-1-302(b) to conform to revisions made to article 1
by the same act.

Sec. 42a-4A-205. Erroneous payment orders. (a) If an accepted payment order
was transmitted pursuant to a security procedure for the detection of error and the payment order (i) erroneously instructed payment to a beneficiary not intended by the
sender, (ii) erroneously instructed payment in an amount greater than the amount intended by the sender, or (iii) was an erroneously transmitted duplicate of a payment
order previously sent by the sender, the following rules apply:

(1) If the sender proves that the sender or a person acting on behalf of the sender
pursuant to section 42a-4A-206 complied with the security procedure and that the error
would have been detected if the receiving bank had also complied, the sender is not
obliged to pay the order to the extent stated in subdivisions (2) and (3).

(2) If the funds transfer is completed on the basis of an erroneous payment order
described in clause (i) or (iii) of subsection (a), the sender is not obliged to pay the order
and the receiving bank is entitled to recover from the beneficiary any amount paid to
the beneficiary to the extent allowed by the law governing mistake and restitution.

(3) If the funds transfer is completed on the basis of a payment order described in
clause (ii) of subsection (a), the sender is not obliged to pay the order to the extent the
amount received by the beneficiary is greater than the amount intended by the sender.
In that case, the receiving bank is entitled to recover from the beneficiary the excess
amount received to the extent allowed by the law governing mistake and restitution.

(b) If (i) the sender of an erroneous payment order described in subsection (a) is
not obliged to pay all or part of the order, and (ii) the sender receives notification from
the receiving bank that the order was accepted by the bank or that the sender's account
was debited with respect to the order, the sender has a duty to exercise ordinary care,
on the basis of information available to the sender, to discover the error with respect to
the order and to advise the bank of the relevant facts within a reasonable time, not
exceeding ninety days, after the bank's notification was received by the sender. If the
bank proves that the sender failed to perform that duty, the sender is liable to the bank
for the loss the bank proves it incurred as a result of the failure, but the liability of the
sender may not exceed the amount of the sender's order.

(c) This section applies to amendments to payment orders to the same extent it
applies to payment orders.

Sec. 42a-4A-206. Transmission of payment order through funds-transfer or
other communication system. (a) If a payment order addressed to a receiving bank is
transmitted to a funds-transfer system or other third-party communication system for
transmittal to the bank, the system is deemed to be an agent of the sender for the purpose
of transmitting the payment order to the bank. If there is a discrepancy between the
terms of the payment order transmitted to the system and the terms of the payment order
transmitted by the system to the bank, the terms of the payment order of the sender are
those transmitted by the system. This section does not apply to a funds-transfer system
of the federal reserve banks.

(b) This section applies to cancellations and amendments of payment orders to the
same extent it applies to payment orders.

Sec. 42a-4A-207. Misdescription of beneficiary. (a) Subject to subsection (b), if,
in a payment order received by the beneficiary's bank, the name, bank account number,
or other identification of the beneficiary refers to a nonexistent or unidentifiable person
or account, no person has rights as a beneficiary of the order and acceptance of the order
cannot occur.

(b) If a payment order received by the beneficiary's bank identifies the beneficiary
both by name and by an identifying or bank account number and the name and number
identify different persons, the following rules apply:

(1) Except as otherwise provided in subsection (c), if the beneficiary's bank does
not know that the name and number refer to different persons, it may rely on the number
as the proper identification of the beneficiary of the order. The beneficiary's bank need
not determine whether the name and number refer to the same person.

(2) If the beneficiary's bank pays the person identified by name or knows that the
name and number identify different persons, no person has rights as beneficiary except
the person paid by the beneficiary's bank if that person was entitled to receive payment
from the originator of the funds transfer. If no person has rights as beneficiary, acceptance of the order cannot occur.

(c) If (i) a payment order described in subsection (b) is accepted, (ii) the originator's
payment order described the beneficiary inconsistently by name and number, and (iii)
the beneficiary's bank pays the person identified by number as permitted by subdivision
(1) of subsection (b), the following rules apply:

(1) If the originator is a bank, the originator is obliged to pay its order.

(2) If the originator is not a bank and proves that the person identified by number
was not entitled to receive payment from the originator, the originator is not obliged to
pay its order unless the originator's bank proves that the originator, before acceptance
of the originator's order, had notice that payment of a payment order issued by the
originator might be made by the beneficiary's bank on the basis of an identifying or
bank account number even if it identifies a person different from the named beneficiary.
Proof of notice may be made by any admissible evidence. The originator's bank satisfies
the burden of proof if it proves that the originator, before the payment order was accepted,
signed a writing stating the information to which the notice relates.

(d) In a case governed by subdivision (1) of subsection (b), if the beneficiary's bank
rightfully pays the person identified by number and that person was not entitled to receive
payment from the originator, the amount paid may be recovered from that person to the
extent allowed by the law governing mistake and restitution as follows:

(1) If the originator is obliged to pay its payment order as stated in subsection (c),
the originator has the right to recover.

(2) If the originator is not a bank and is not obliged to pay its payment order, the
originator's bank has the right to recover.

(1) The receiving bank may rely on the number as the proper identification of the
intermediary or beneficiary's bank and need not determine whether the number identifies a bank.

(2) The sender is obliged to compensate the receiving bank for any loss and expenses
incurred by the receiving bank as a result of its reliance on the number in executing or
attempting to execute the order.

(b) This subsection applies to a payment order identifying an intermediary bank or
the beneficiary's bank both by name and an identifying number if the name and number
identify different persons.

(1) If the sender is a bank, the receiving bank may rely on the number as the proper
identification of the intermediary or beneficiary's bank if the receiving bank, when it
executes the sender's order, does not know that the name and number identify different
persons. The receiving bank need not determine whether the name and number refer to
the same person or whether the number refers to a bank. The sender is obliged to compensate the receiving bank for any loss and expenses incurred by the receiving bank as a
result of its reliance on the number in executing or attempting to execute the order.

(2) If the sender is not a bank and the receiving bank proves that the sender, before
the payment order was accepted, had notice that the receiving bank might rely on the
number as the proper identification of the intermediary or beneficiary's bank even if it
identifies a person different from the bank identified by name, the rights and obligations
of the sender and the receiving bank are governed by subsection (b)(1), as though the
sender were a bank. Proof of notice may be made by any admissible evidence. The
receiving bank satisfies the burden of proof if it proves that the sender, before the payment order was accepted, signed a writing stating the information to which the notice
relates.

(3) Regardless of whether the sender is a bank, the receiving bank may rely on the
name as the proper identification of the intermediary or beneficiary's bank if the receiving bank, at the time it executes the sender's order, does not know that the name and
number identify different persons. The receiving bank need not determine whether the
name and number refer to the same person.

(4) If the receiving bank knows that the name and number identify different persons,
reliance on either the name or the number in executing the sender's payment order is a
breach of the obligation stated in subdivision (1) of subsection (a) of section 42a-4A-302.

(b) Subject to subsections (c) and (d), a beneficiary's bank accepts a payment order
at the earliest of the following times:

(1) When the bank (i) pays the beneficiary as stated in subsection (a) or (b) of section
42a-4A-405, or (ii) notifies the beneficiary of receipt of the order or that the account of
the beneficiary has been credited with respect to the order unless the notice indicates
that the bank is rejecting the order or that funds with respect to the order may not be
withdrawn or used until receipt of payment from the sender of the order;

(2) When the bank receives payment of the entire amount of the sender's order
pursuant to subdivision (1) or (2) of subsection (a) of section 42a-4A-403; or

(3) The opening of the next funds-transfer business day of the bank following the
payment date of the order if, at that time, the amount of the sender's order is fully covered
by a withdrawable credit balance in an authorized account of the sender or the bank has
otherwise received full payment from the sender, unless the order was rejected before
that time or is rejected within (i) one hour after that time, or (ii) one hour after the
opening of the next business day of the sender following the payment date if that time
is later. If notice of rejection is received by the sender after the payment date and the
authorized account of the sender does not bear interest, the bank is obliged to pay interest
to the sender on the amount of the order for the number of days elapsing after the payment
date to the day the sender receives notice or learns that the order was not accepted,
counting that day as an elapsed day. If the withdrawable credit balance during that
period falls below the amount of the order, the amount of interest payable is reduced
accordingly.

(c) Acceptance of a payment order cannot occur before the order is received by the
receiving bank. Acceptance does not occur under subdivision (2) or (3) of subsection
(b) if the beneficiary of the payment order does not have an account with the receiving
bank, the account has been closed, or the receiving bank is not permitted by law to
receive credits for the beneficiary's account.

(d) A payment order issued to the originator's bank cannot be accepted until the
payment date if the bank is the beneficiary's bank, or the execution date if the bank is
not the beneficiary's bank. If the originator's bank executes the originator's payment
order before the execution date or pays the beneficiary of the originator's payment order
before the payment date and the payment order is subsequently cancelled pursuant to
subsection (b) of section 42a-4A-211, the bank may recover from the beneficiary any
payment received to the extent allowed by the law governing mistake and restitution.

Sec. 42a-4A-210. Rejection of payment order. (a) A payment order is rejected
by the receiving bank by a notice of rejection transmitted to the sender orally, electronically, or in writing. A notice of rejection need not use any particular words and is sufficient if it indicates that the receiving bank is rejecting the order or will not execute or
pay the order. Rejection is effective when the notice is given if transmission is by a
means that is reasonable in the circumstances. If notice of rejection is given by a means
that is not reasonable, rejection is effective when the notice is received. If an agreement
of the sender and receiving bank establishes the means to be used to reject a payment
order, (i) any means complying with the agreement is reasonable and (ii) any means not
complying is not reasonable unless no significant delay in receipt of the notice resulted
from the use of the noncomplying means.

(b) This subsection applies if a receiving bank other than the beneficiary's bank fails
to execute a payment order despite the existence on the execution date of a withdrawable
credit balance in an authorized account of the sender sufficient to cover the order. If the
sender does not receive notice of rejection of the order on the execution date and the
authorized account of the sender does not bear interest, the bank is obliged to pay interest
to the sender on the amount of the order for the number of days elapsing after the
execution date to the earlier of the day the order is cancelled pursuant to subsection (d)
of section 42a-4A-211 or the day the sender receives notice or learns that the order was
not executed, counting the final day of the period as an elapsed day. If the withdrawable
credit balance during that period falls below the amount of the order, the amount of
interest is reduced accordingly.

(c) If a receiving bank suspends payments, all unaccepted payment orders issued
to it are deemed rejected at the time the bank suspends payments.

(d) Acceptance of a payment order precludes a later rejection of the order. Rejection
of a payment order precludes a later acceptance of the order.

Sec. 42a-4A-211. Cancellation and amendment of payment order. (a) A communication of the sender of a payment order cancelling or amending the order may
be transmitted to the receiving bank orally, electronically, or in writing. If a security
procedure is in effect between the sender and the receiving bank, the communication
is not effective to cancel or amend the order unless the communication is verified pursuant to the security procedure or the bank agrees to the cancellation or amendment.

(b) Subject to subsection (a), a communication by the sender cancelling or amending
a payment order is effective to cancel or amend the order if notice of the communication
is received at a time and in a manner affording the receiving bank a reasonable opportunity to act on the communication before the bank accepts the payment order.

(c) After a payment order has been accepted, cancellation or amendment of the
order is not effective unless the receiving bank agrees or a funds- transfer system rule
allows cancellation or amendment without agreement of the bank.

(1) With respect to a payment order accepted by a receiving bank other than the
beneficiary's bank, cancellation or amendment is not effective unless a conforming
cancellation or amendment of the payment order issued by the receiving bank is also
made.

(2) With respect to a payment order accepted by the beneficiary's bank, cancellation
or amendment is not effective unless the order was issued in execution of an unauthorized
payment order, or because of a mistake by a sender in the funds transfer which resulted
in the issuance of a payment order (i) that is a duplicate of a payment order previously
issued by the sender, (ii) that orders payment to a beneficiary not entitled to receive
payment from the originator, or (iii) that orders payment in an amount greater than the
amount the beneficiary was entitled to receive from the originator. If the payment order
is cancelled or amended, the beneficiary's bank is entitled to recover from the beneficiary
any amount paid to the beneficiary to the extent allowed by the law governing mistake
and restitution.

(d) An unaccepted payment order is cancelled by operation of law at the close of
the fifth funds-transfer business day of the receiving bank after the execution date or
payment date of the order.

(e) A cancelled payment order cannot be accepted. If an accepted payment order is
cancelled, the acceptance is nullified and no person has any right or obligation based
on the acceptance. Amendment of a payment order is deemed to be cancellation of the
original order at the time of amendment and issue of a new payment order in the amended
form at the same time.

(f) Unless otherwise provided in an agreement of the parties or in a funds-transfer
system rule, if the receiving bank, after accepting a payment order, agrees to cancellation
or amendment of the order by the sender or is bound by a funds-transfer system rule
allowing cancellation or amendment without the bank's agreement, the sender, whether
or not cancellation or amendment is effective, is liable to the bank for any loss and
expenses, including reasonable attorney's fees, incurred by the bank as a result of the
cancellation or amendment or attempted cancellation or amendment.

(g) A payment order is not revoked by the death or legal incapacity of the sender
unless the receiving bank knows of the death or of an adjudication of incapacity by a
court of competent jurisdiction and has reasonable opportunity to act before acceptance
of the order.

(h) A funds-transfer system rule is not effective to the extent it conflicts with subdivision (2) of subsection (c).

Sec. 42a-4A-212. Liability and duty of receiving bank regarding unaccepted
payment order. If a receiving bank fails to accept a payment order that it is obliged by
express agreement to accept, the bank is liable for breach of the agreement to the extent
provided in the agreement or in this article, but does not otherwise have any duty to
accept a payment order or, before acceptance, to take any action, or refrain from taking
action, with respect to the order except as provided in this article or by express agreement.
Liability based on acceptance arises only when acceptance occurs as stated in section
42a-4A-209, and liability is limited to that provided in this article. A receiving bank is
not the agent of the sender or beneficiary of the payment order it accepts, or of any other
party to the funds transfer, and the bank owes no duty to any party to the funds transfer
except as provided in this article or by express agreement.

PART 3
EXECUTION OF SENDER'S PAYMENT ORDER
BY RECEIVING BANK

Sec. 42a-4A-301. Execution and execution date. (a) A payment order is "executed" by the receiving bank when it issues a payment order intended to carry out the
payment order received by the bank. A payment order received by the beneficiary's
bank can be accepted but cannot be executed.

(b) "Execution date" of a payment order means the day on which the receiving bank
may properly issue a payment order in execution of the sender's order. The execution
date may be determined by instruction of the sender but cannot be earlier than the day
the order is received and, unless otherwise determined, is the day the order is received.
If the sender's instruction states a payment date, the execution date is the payment date
or an earlier date on which execution is reasonably necessary to allow payment to the
beneficiary on the payment date.

(1) The receiving bank is obliged to issue, on the execution date, a payment order
complying with the sender's order and to follow the sender's instructions concerning
(i) any intermediary bank or funds-transfer system to be used in carrying out the funds
transfer, or (ii) the means by which payment orders are to be transmitted in the funds
transfer. If the originator's bank issues a payment order to an intermediary bank, the
originator's bank is obliged to instruct the intermediary bank according to the instruction
of the originator. An intermediary bank in the funds transfer is similarly bound by an
instruction given to it by the sender of the payment order it accepts.

(2) If the sender's instruction states that the funds transfer is to be carried out telephonically or by wire transfer or otherwise indicates that the funds transfer is to be
carried out by the most expeditious means, the receiving bank is obliged to transmit its
payment order by the most expeditious available means and to instruct any intermediary
bank accordingly. If a sender's instruction states a payment date, the receiving bank is
obliged to transmit its payment order at a time and by means reasonably necessary to
allow payment to the beneficiary on the payment date or as soon thereafter as is feasible.

(b) Unless otherwise instructed, a receiving bank executing a payment order may
(i) use any funds-transfer system if use of that system is reasonable in the circumstances,
and (ii) issue a payment order to the beneficiary's bank or to an intermediary bank
through which a payment order conforming to the sender's order can expeditiously be
issued to the beneficiary's bank if the receiving bank exercises ordinary care in the
selection of the intermediary bank. A receiving bank is not required to follow an instruction of the sender designating a funds-transfer system to be used in carrying out the
funds transfer if the receiving bank, in good faith, determines that it is not feasible to
follow the instruction or that following the instruction would unduly delay completion
of the funds transfer.

(c) Unless subdivision (2) of subsection (a) applies or the receiving bank is otherwise instructed, the bank may execute a payment order by transmitting its payment order
by first class mail or by any means reasonable in the circumstances. If the receiving
bank is instructed to execute the sender's order by transmitting its payment order by a
particular means, the receiving bank may issue its payment order by the means stated
or by any means as expeditious as the means stated.

(d) Unless instructed by the sender, (i) the receiving bank may not obtain payment
of its charges for services and expenses in connection with the execution of the sender's
order by issuing a payment order in an amount equal to the amount of the sender's order
less the amount of the charges, and (ii) may not instruct a subsequent receiving bank to
obtain payment of its charges in the same manner.

Sec. 42a-4A-303. Erroneous execution of payment order. (a) A receiving bank
that (i) executes the payment order of the sender by issuing a payment order in an amount
greater than the amount of the sender's order, or (ii) issues a payment order in execution
of the sender's order and then issues a duplicate order, is entitled to payment of the
amount of the sender's order under subsection (c) of section 42a-4A-402 if that subsection is otherwise satisfied. The bank is entitled to recover from the beneficiary of the
erroneous order the excess payment received to the extent allowed by the law governing
mistake and restitution.

(b) A receiving bank that executes the payment order of the sender by issuing a
payment order in an amount less than the amount of the sender's order is entitled to
payment of the amount of the sender's order under subsection (c) of section 42a-4A-402 if (i) that subsection is otherwise satisfied and (ii) the bank corrects its mistake by
issuing an additional payment order for the benefit of the beneficiary of the sender's
order. If the error is not corrected, the issuer of the erroneous order is entitled to receive
or retain payment from the sender of the order it accepted only to the extent of the
amount of the erroneous order. This subsection does not apply if the receiving bank
executes the sender's payment order by issuing a payment order in an amount less than
the amount of the sender's order for the purpose of obtaining payment of its charges for
services and expenses pursuant to instruction of the sender.

(c) If a receiving bank executes the payment order of the sender by issuing a payment
order to a beneficiary different from the beneficiary of the sender's order and the funds
transfer is completed on the basis of that error, the sender of the payment order that was
erroneously executed and all previous senders in the funds transfer are not obliged to
pay the payment orders they issued. The issuer of the erroneous order is entitled to
recover from the beneficiary of the order the payment received to the extent allowed by
the law governing mistake and restitution.

Sec. 42a-4A-304. Duty of sender to report erroneously executed payment order. If the sender of a payment order that is erroneously executed as stated in section
42a-4A-303 receives notification from the receiving bank that the order was executed
or that the sender's account was debited with respect to the order, the sender has a duty
to exercise ordinary care to determine, on the basis of information available to the sender,
that the order was erroneously executed and to notify the bank of the relevant facts
within a reasonable time not exceeding ninety days after the notification from the bank
was received by the sender. If the sender fails to perform that duty, the bank is not
obliged to pay interest on any amount refundable to the sender under Subsection (d) of
section 42a-4A-402 for the period before the bank learns of the execution error. The
bank is not entitled to any recovery from the sender on account of a failure by the sender
to perform the duty stated in this section.

Sec. 42a-4A-305. Liability for late or improper execution or failure to execute
payment order. (a) If a funds transfer is completed but execution of a payment order
by the receiving bank in breach of section 42a-4A-302 results in delay in payment to the
beneficiary, the bank is obliged to pay interest to either the originator or the beneficiary of
the funds transfer for the period of delay caused by the improper execution. Except as
provided in subsection (c), additional damages are not recoverable.

(b) If execution of a payment order by a receiving bank in breach of section 42a-4A-302 results in (i) noncompletion of the funds transfer, (ii) failure to use an intermediary bank designated by the originator, or (iii) issuance of a payment order that does not
comply with the terms of the payment order of the originator, the bank is liable to the
originator for its expenses in the funds transfer and for incidental expenses and interest
losses, to the extent not covered by subsection (a), resulting from the improper execution.
Except as provided in subsection (c), additional damages are not recoverable.

(c) In addition to the amounts payable under subsections (a) and (b), damages, including consequential damages, are recoverable to the extent provided in an express
written agreement of the receiving bank.

(d) If a receiving bank fails to execute a payment order it was obliged by express
agreement to execute, the receiving bank is liable to the sender for its expenses in the
transaction and for incidental expenses and interest losses resulting from the failure to
execute. Additional damages, including consequential damages, are recoverable to the
extent provided in an express written agreement of the receiving bank, but are not otherwise recoverable.

(e) Reasonable attorney's fees are recoverable if demand for compensation under
subsection (a) or (b) is made and refused before an action is brought on the claim. If a
claim is made for breach of an agreement under subsection (d) and the agreement does
not provide for damages, reasonable attorney's fees are recoverable if demand for compensation under subsection (d) is made and refused before an action is brought on the
claim.

(f) Except as stated in this section, the liability of a receiving bank under subsections
(a) and (b) may not be varied by agreement.

PART 4
PAYMENTS

Sec. 42a-4A-401. Payment date. "Payment date" of a payment order means the
day on which the amount of the order is payable to the beneficiary by the beneficiary's
bank. The payment date may be determined by instruction of the sender but cannot be
earlier than the day the order is received by the beneficiary's bank and, unless otherwise
determined, is the day the order is received by the beneficiary's bank.

(b) With respect to a payment order issued to the beneficiary's bank, acceptance of
the order by the bank obliges the sender to pay the bank the amount of the order, but
payment is not due until the payment date of the order.

(c) This subsection is subject to subsection (e) and to section 42a-4A-303. With
respect to a payment order issued to a receiving bank other than the beneficiary's bank,
acceptance of the order by the receiving bank obliges the sender to pay the bank the
amount of the sender's order. Payment by the sender is not due until the execution date
of the sender's order. The obligation of that sender to pay its payment order is excused
if the funds transfer is not completed by acceptance by the beneficiary's bank of a
payment order instructing payment to the beneficiary of that sender's payment order.

(d) If the sender of a payment order pays the order and was not obliged to pay all
or part of the amount paid, the bank receiving payment is obliged to refund payment to
the extent the sender was not obliged to pay. Except as provided in sections 42a-4A-204 and 42a-4A-304, interest is payable on the refundable amount from the date of
payment.

(e) If a funds transfer is not completed as stated in subsection (c) and an intermediary
bank is obliged to refund payment as stated in subsection (d) but is unable to do so
because not permitted by applicable law or because the bank suspends payments, a
sender in the funds transfer that executed a payment order in compliance with an instruction, as stated in subdivision (1) of subsection (a) of section 42a-4A-302, to route the
funds transfer through that intermediary bank is entitled to receive or retain payment
from the sender of the payment order that it accepted. The first sender in the funds
transfer that issued an instruction requiring routing through that intermediary bank is
subrogated to the right of the bank that paid the intermediary bank to refund as stated
in subsection (d).

(f) The right of the sender of a payment order to be excused from the obligation to
pay the order as stated in subsection (c) or to receive refund under subsection (d) may
not be varied by agreement.

(1) If the sender is a bank, payment occurs when the receiving bank receives final
settlement of the obligation through a Federal Reserve Bank or through a funds-transfer
system.

(2) If the sender is a bank and the sender (i) credited an account of the receiving
bank with the sender, or (ii) caused an account of the receiving bank in another bank to
be credited, payment occurs when the credit is withdrawn or, if not withdrawn, at midnight of the day on which the credit is withdrawable and the receiving bank learns of
that fact.

(3) If the receiving bank debits an account of the sender with the receiving bank,
payment occurs when the debit is made to the extent the debit is covered by a withdrawable credit balance in the account.

(b) If the sender and receiving bank are members of a funds-transfer system that
nets obligations multilaterally among participants, the receiving bank receives final
settlement when settlement is complete in accordance with the rules of the system. The
obligation of the sender to pay the amount of a payment order transmitted through the
funds-transfer system may be satisfied, to the extent permitted by the rules of the system,
by setting off and applying against the sender's obligation the right of the sender to
receive payment from the receiving bank of the amount of any other payment order
transmitted to the sender by the receiving bank through the funds-transfer system. The
aggregate balance of obligations owed by each sender to each receiving bank in the
funds-transfer system may be satisfied, to the extent permitted by the rules of the system,
by setting off and applying against that balance the aggregate balance of obligations
owed to the sender by other members of the system. The aggregate balance is determined
after the right of set-off stated in the second sentence of this subsection has been exercised.

(c) If two banks transmit payment orders to each other under an agreement that
settlement of the obligations of each bank to the other under section 42a-4A-402 will
be made at the end of the day or other period, the total amount owed with respect to all
orders transmitted by one bank shall be set off against the total amount owed with respect
to all orders transmitted by the other bank. To the extent of the set-off, each bank has
made payment to the other.

(d) In a case not covered by subsection (a), the time when payment of the sender's
obligation under subsection (b) or (c) of section 42a-4A-402 occurs is governed by
applicable principles of law that determine when an obligation is satisfied.

Sec. 42a-4A-404. Obligation of beneficiary's bank to pay and give notice to
beneficiary. (a) Subject to subsection (e) of section 42a-4A-211 and subsections (d)
and (e) of section 42a-4A-405, if a beneficiary's bank accepts a payment order, the bank
is obliged to pay the amount of the order to the beneficiary of the order. Payment is due
on the payment date of the order, but if acceptance occurs on the payment date after the
close of the funds-transfer business day of the bank, payment is due on the next funds-transfer business day. If the bank refuses to pay after demand by the beneficiary and
receipt of notice of particular circumstances that will give rise to consequential damages
as a result of nonpayment, the beneficiary may recover damages resulting from the
refusal to pay to the extent the bank had notice of the damages, unless the bank proves
that it did not pay because of a reasonable doubt concerning the right of the beneficiary
to payment.

(b) If a payment order accepted by the beneficiary's bank instructs payment to an
account of the beneficiary, the bank is obliged to notify the beneficiary of receipt of the
order before midnight of the next funds-transfer business day following the payment
date. If the payment order does not instruct payment to an account of the beneficiary,
the bank is required to notify the beneficiary only if notice is required by the order. Notice
may be given by first class mail or any other means reasonable in the circumstances. If
the bank fails to give the required notice, the bank is obliged to pay interest to the
beneficiary on the amount of the payment order from the day notice should have been
given until the day the beneficiary learned of receipt of the payment order by the bank.
No other damages are recoverable. Reasonable attorney's fees are also recoverable if
demand for interest is made and refused before an action is brought on the claim.

(c) The right of a beneficiary to receive payment and damages as stated in subsection
(a) may not be varied by agreement or a funds-transfer system rule. The right of a
beneficiary to be notified as stated in subsection (b) may be varied by agreement of the
beneficiary or by a funds-transfer system rule if the beneficiary is notified of the rule
before initiation of the funds transfer.

Sec. 42a-4A-405. Payment by beneficiary's bank to beneficiary. (a) If the beneficiary's bank credits an account of the beneficiary of a payment order, payment of the
bank's obligation under subsection (a) of section 42a-4A-404 occurs when and to the
extent (i) the beneficiary is notified of the right to withdraw the credit, (ii) the bank
lawfully applies the credit to a debt of the beneficiary, or (iii) funds with respect to the
order are otherwise made available to the beneficiary by the bank.

(b) If the beneficiary's bank does not credit an account of the beneficiary of a payment order, the time when payment of the bank's obligation under subsection (a) of
section 42a-4A-404 occurs is governed by principles of law that determine when an
obligation is satisfied.

(c) Except as stated in subsections (d) and (e), if the beneficiary's bank pays the
beneficiary of a payment order under a condition to payment or agreement of the beneficiary giving the bank the right to recover payment from the beneficiary if the bank
does not receive payment of the order, the condition to payment or agreement is not
enforceable.

(d) A funds-transfer system rule may provide that payments made to beneficiaries
of funds transfers made through the system are provisional until receipt of payment by
the beneficiary's bank of the payment order it accepted. A beneficiary's bank that makes
a payment that is provisional under the rule is entitled to refund from the beneficiary if
(i) the rule requires that both the beneficiary and the originator be given notice of the
provisional nature of the payment before the funds transfer is initiated, (ii) the beneficiary, the beneficiary's bank and the originator's bank agreed to be bound by the rule,
and (iii) the beneficiary's bank did not receive payment of the payment order that it
accepted. If the beneficiary is obliged to refund payment to the beneficiary's bank,
acceptance of the payment order by the beneficiary's bank is nullified and no payment by
the originator of the funds transfer to the beneficiary occurs under section 42a-4A-406.

(e) This subsection applies to a funds transfer that includes a payment order transmitted over a funds-transfer system that (i) nets obligations multilaterally among participants, and (ii) has in effect a loss-sharing agreement among participants for the purpose
of providing funds necessary to complete settlement of the obligations of one or more
participants that do not meet their settlement obligations. If the beneficiary's bank in
the funds transfer accepts a payment order and the system fails to complete settlement
pursuant to its rules with respect to any payment order in the funds transfer, (i) the
acceptance by the beneficiary's bank is nullified and no person has any right or obligation
based on the acceptance, (ii) the beneficiary's bank is entitled to recover payment from
the beneficiary, (iii) no payment by the originator to the beneficiary occurs under section
42a-4A-406, and (iv) subject to subsection (e) of section 42a-4A-402, each sender in
the funds transfer is excused from its obligation to pay its payment order under subsection
(c) of section 42a-4A-402 because the funds transfer has not been completed.

Sec. 42a-4A-406. Payment by originator to beneficiary; discharge of underlying obligation. (a) Subject to subsection (e) of section 42a-4A-211 and subsections (d)
and (e) of section 42a-4A-405, the originator of a funds transfer pays the beneficiary
of the originator's payment order (i) at the time of payment order for the benefit of the
beneficiary is accepted by the beneficiary's bank in the funds transfer and (ii) in an
amount equal to the amount of the order accepted by the beneficiary's bank, but not
more than the amount of the originator's order.

(b) If payment under subsection (a) is made to satisfy an obligation, the obligation
is discharged to the same extent discharge would result from payment to the beneficiary
of the same amount in money, unless (i) the payment under subsection (a) was made
by a means prohibited by the contract of the beneficiary with respect to the obligation,
(ii) the beneficiary, within a reasonable time after receiving notice of receipt of the order
by the beneficiary's bank, notified the originator of the beneficiary's refusal of the
payment, (iii) funds with respect to the order were not withdrawn by the beneficiary or
applied to a debt of the beneficiary, and (iv) the beneficiary would suffer a loss that
could reasonably have been avoided if payment had been made by a means complying
with the contract. If payment by the originator does not result in discharge under this
section, the originator is subrogated to the rights of the beneficiary to receive payment
from the beneficiary's bank under subsection (a) of section 42a-4A-404.

(c) For the purpose of determining whether discharge of an obligation occurs under
subsection (b), if the beneficiary's bank accepts a payment order in an amount equal to
the amount of the originator's payment order less charges of one or more receiving
banks in the funds transfer, payment to the beneficiary is deemed to be in the amount
of the originator's order unless upon demand by the beneficiary the originator does not
pay the beneficiary the amount of the deducted charges.

(d) Rights of the originator or of the beneficiary of a funds transfer under this section
may be varied only by agreement of the originator and the beneficiary.

(b) "Funds-transfer system rule" means a rule of an association of banks (i) governing transmission of payment orders by means of a funds-transfer system of the association or rights and obligations with respect to those orders, or (ii) to the extent the rule
governs rights and obligations between banks that are parties to a funds transfer in which
a Federal Reserve Bank, acting as an intermediary bank, sends a payment order to the
beneficiary's bank. Except as otherwise provided in this article, a funds-transfer system
rule governing rights and obligations between participating banks using the system may
be effective even if the rule conflicts with this article and indirectly affects another party
to the funds transfer who does not consent to the rule. A funds-transfer system rule may
also govern rights and obligations of parties other than participating banks using the
system to the extent stated in subsection (c) of section 42a-4A-404, subsection (d) of
section 42a-4A-405 and subsection (c) of section 42a-4A-507.

(b) This subsection applies to creditor process with respect to an authorized account
of the sender of a payment order if the creditor process is served on the receiving bank.
For the purpose of determining rights with respect to the creditor process, if the receiving
bank accepts the payment order the balance in the authorized account is deemed to be
reduced by the amount of the payment order to the extent the bank did not otherwise
receive payment of the order, unless the creditor process is served at a time and in a
manner affording the bank a reasonable opportunity to act on it before the bank accepts
the payment order.

(c) If a beneficiary's bank has received a payment order for payment to the beneficiary's account in the bank, the following rules apply:

(1) The bank may credit the beneficiary's account. The amount credited may be set
off against an obligation owed by the beneficiary to the bank or may be applied to satisfy
creditor process served on the bank with respect to the account.

(2) The bank may credit the beneficiary's account and allow withdrawal of the
amount credited unless creditor process with respect to the account is served at a time
and in a manner affording the bank a reasonable opportunity to act to prevent withdrawal.

(3) If creditor process with respect to the beneficiary's account has been served and
the bank has had a reasonable opportunity to act on it, the bank may not reject the
payment order except for a reason unrelated to the service of process.

(d) Creditor process with respect to a payment by the originator to the beneficiary
pursuant to a funds transfer may be served only on the beneficiary's bank with respect
to the debt owed by that bank to the beneficiary. Any other bank served with the creditor
process is not obliged to act with respect to the process.

Sec. 42a-4A-503. Injunction or restraining order with respect to funds transfer. For proper cause and in compliance with applicable law, a court may restrain (i) a
person from issuing a payment order to initiate a funds transfer, (ii) an originator's bank
from executing the payment order of the originator, or (iii) the beneficiary's bank from
releasing funds to the beneficiary or the beneficiary from withdrawing the funds. A
court may not otherwise restrain a person from issuing a payment order, paying or
receiving payment of a payment order, or otherwise acting with respect to a funds
transfer.

(b) In determining whether a credit to an account has been withdrawn by the holder
of the account or applied to a debt of the holder of the account, credits first made to the
account are first withdrawn or applied.

Sec. 42a-4A-505. Preclusion of objection to debit of customer's account. If a
receiving bank has received payment from its customer with respect to a payment order
issued in the name of the customer as sender and accepted by the bank, and the customer
received notification reasonably identifying the order, the customer is precluded from
asserting that the bank is not entitled to retain the payment unless the customer notifies
the bank of the customer's objection to the payment within one year after the notification
was received by the customer.

Sec. 42a-4A-506. Rate of interest. (a) If, under this article, a receiving bank is
obliged to pay interest with respect to a payment order issued to the bank, the amount
payable may be determined (i) by agreement of the sender and receiving bank, or (ii)
by a funds-transfer system rule if the payment order is transmitted through a funds-transfer system.

(b) If the amount of interest is not determined by an agreement or rule as stated in
subsection (a), the amount is calculated by multiplying the applicable Federal Funds
rate by the amount on which interest is payable, and then multiplying the product by
the number of days for which interest is payable. The applicable Federal Funds rate is
the average of the Federal Funds rates published by the Federal Reserve Bank of New
York for each of the days for which interest is payable divided by three hundred sixty.
The Federal Funds rate for any day on which a published rate is not available is the
same as the published rate for the next preceding day for which there is a published rate.
If a receiving bank that accepted a payment order is required to refund payment to the
sender of the order because the funds transfer was not completed, but the failure to
complete was not due to any fault by the bank, the interest payable is reduced by a
percentage equal to the reserve requirement on deposits of the receiving bank.

(1) The rights and obligations between the sender of a payment order and the receiving bank are governed by the law of the jurisdiction in which the receiving bank is
located.

(2) The rights and obligations between the beneficiary's bank and the beneficiary
are governed by the law of the jurisdiction in which the beneficiary's bank is located.

(3) The issue of when payment is made pursuant to a funds transfer by the originator
to the beneficiary is governed by the law of the jurisdiction in which the beneficiary's
bank is located.

(b) If the parties described in each paragraph of subsection (a) have made an
agreement selecting the law of a particular jurisdiction to govern rights and obligations
between each other, the law of that jurisdiction governs those rights and obligations,
whether or not the payment order or the funds transfer bears a reasonable relation to
that jurisdiction.

(c) A funds-transfer system rule may select the law of a particular jurisdiction to
govern (i) rights and obligations between participating banks with respect to payment
orders transmitted or processed through the system, or (ii) the rights and obligations of
some or all parties to a funds transfer any part of which is carried out by means of the
system. A choice of law made pursuant to clause (i) is binding on participating banks.
A choice of law made pursuant to clause (ii) is binding on the originator, other sender,
or a receiving bank having notice that the funds-transfer system might be used in the
funds transfer and of the choice of law by the system when the originator, other sender,
or receiving bank issued or accepted a payment order. The beneficiary of a funds transfer
is bound by the choice of law if, when the funds transfer is initiated, the beneficiary has
notice that the funds-transfer system might be used in the funds transfer and of the choice
of law by the system. The law of a jurisdiction selected pursuant to this subsection may
govern, whether or not that law bears a reasonable relation to the matter in issue.

(d) In the event of inconsistency between an agreement under subsection (b) and a
choice-of-law rule under subsection (c), the agreement under subsection (b) prevails.

(e) If a funds transfer is made by use of more than one funds-transfer system and
there is inconsistency between choice-of-law rules of the systems, the matter in issue
is governed by the law of the selected jurisdiction that has the most significant relationship to the matter in issue.